• Nathan Miller

Price vs. Cost: What's The Difference?

Whether you're purchasing a home, car, or financial products to fit your lifestyle, the amount of money it requires to purchase anything is an important consideration. There certainly is a difference between price and cost, let's explore that below.


Price


Simply put, price is the amount you are willing to pay for a product or service. Usually this is the first thing you notice when you're shopping for an item. It may be listed on a brochure, price tag, or in the case of financial products, a premium.


Similar to a car purchase, the features and benefits of a financial product will raise the price of said product or service. For example, the price of tinted windows, custom leather interior, and a Bose sound system would increase the price of a car compared to the stock-standard version of the car, correct? It's the same as adding features and additional products on top of products in financial services. Furthermore,


Make no doubt, price is important and should be considered when buying a product or service. Price, although different then cost, can play a huge role in the quality of whatever it is that you are purchasing.


Cost


There are a number of definitions for the word cost. Notably, cost is the effort, loss, or sacrifice necessary to achieve or obtain something. Cost is the after effect of paying a price for something. If you choose a less expensive product or service, will it cost you more in the end?


For instance, if you purchase a bicycle at Walmart, the upfront "price" will be less than buying that same bicycle at a bicycle shop. But what is that? They are the same bike.


Well, first off, Walmart isn't a bike shop, it's a all-inclusive retail store that sells bikes, groceries, children's clothing, and coffee makers. Their main focus is... everything. Whereas the bike shop specializes specifically in bikes.


For that reason, they'll likely have the most expertise on the frame of the bike, the chain, how the wheels will work, what you can expect as far as seat comfort, and they'll likely be able to answer the phone when you call six months down the road with a question about your bike. Can you expect the same service from Walmart?


Simply put, only considering the price of a product or service at strictly face value can cost you greatly over the long term.


The same principles apply to financial products. Many companies will give you an upfront price that is attractive. If you aren't confident in your understanding of a specific financial product, the price will likely become irrelevant and the cost will become detrimental-- specifically when you're considering your hard earned money.


Most importantly, choosing a the right financial professional to work with should be a consideration when comparing price and cost. Whether it's with a Lyv Financial agent or not, the professional that invests their time and energy into you along with of course knowledge of finance in general should be of the utmost importance. Choosing who you work with when it comes to your money is your choice-- make it count!


Spend the time with your financial professional to ensure that they understand and truly know your family and your preferred lifestyle. If the price is right, it won't cost you later!


To learn more, schedule a free consultation with one of our qualified Lyv Financial professionals at www.lyvfin.com

0 comments